5 Pit Falls To Lose A Deal After Signing The Contract
It is very easy to get excited when you finally get a signature on a contract. But it is critical that you stay focused on your work until the transfer is completed and your payment is on the way.
Every deal and every customer is just a little different. So you must understand that there is no perfect process or checklist to follow that will get you to a successful completion of every deal.
Stay at the top of your game until you know that the agreement is completed, and you are not facing litigation or any other pitfall, even after the signing. This list of five pitfalls are far from the only issues that you could face, but they are easy to avoid if you remain focused and professional.
Not Verifying All Signers
Signer verification is critical. If you do not have the signatures of all of the property owners, the deal will stall. For local sales, you can often see the actual documents. But when working virtually, you will need to rely on the honesty of the seller or sellers. Regardless of the type of transaction, always ask the owners if there could possibly be any other owners listed for the specific property.
If you fail to verify all of the owners, it is possible that the attorney will find additional owners who need to sign during due diligence. In the best-case scenario, you are paying the attorney extra because of this added work to review the new documents. In the worst case, the newly discovered owner refuses to sign, and your deal is dead. To avoid this hassle and waste of your time and effort, verify all of the signatures before turning the docs over to your attorney.
Tenants Denying Access
When you are wholesaling, there are many different situations that can complicate your transactions. And one of the biggest roadblocks can be a tenant living in the property. Make sure that your contract stipulates that you will need access to the entire property at the time of inspection. This is required in most areas, but tenants often resist allowing a stranger into their home.
The best way to handle this issue is to ensure that the property owner provides at least 48 hours’ notice to the tenant. This notice will make your life easier and is the polite way to handle a tenant, who might soon be your tenant.
With that in mind, it is also wise to ask the owner to provide you with a contact number for the tenant so that you can make an introduction call. And it never hurts to arrive at the tenant’s home with a small gift card as a way to say thank you for access to inspect the entire property.
Liens On The Property
As you well know, the seller will need to provide a clear title before the transfer can be completed. But you don’t want to learn about any liens or other surprises at the signing or even after it. The best course of action is to complete a title search.
In judicial states, the search must be done by a lawyer. In other states, the work is completed by the title company. But having this process completed early on in the deal is the best way to know that your purchase will be completed and that you will be getting paid for your work.
In the real estate business, it is never good to assume anything. Everything needs to be communicated clearly, and in writing whenever possible. This process lets you have some peace of mind and helps to avoid lost deals due to a misunderstanding of any of the nuances of the agreement. Make sure to communicate and verify all of the following:
- The contract process
- The purchase amount
- The earnest money deposit process
- The inspection period
- The legal definition of As-Is
- The close of escrow process and the numbers for the closing
The Seller Backs Out
In most cases, you have no control over this unfortunate event. As long as you have professionally fulfilled your responsibilities, this is out of your control. And you should not feel responsible for the failure of the deal. In many cases, the seller needs to sell but does not really want to sell. So there is a level of emotion that you will not be able to foresee or overcome. In these cases, you are better off letting the deal go if it is possible.
In most areas, you do have legal rights once the contract is signed. And you can attempt to remind the seller of your rights and the possibility of legal action.
There are small signs or indications that you could pick up on from a seller as early as the first meeting that will have you prepared for this type of action. Someone who is very emotional about selling or looking for unreasonable terms or an above market value offer could well be looking for an excuse not to sell.
After you have invested your time and effort in a deal, it can be very demoralizing to have the deal fall apart, even after the contract is signed. But it will happen from time to time in this business. And you need to learn any possible lessons you can and move on to the next deal.